Judge hears finance case against Arizona Attorney General Tom Horne

PHOENIX -- A prosecutor said evidence will show that Arizona Attorney
General Tom Horne was in constant communication with an aide who was running an
independent group backing him in the 2010 election, and she passed on his
suggestions about campaign ads attacking his Democratic rival to her campaign
consultant.

That "coordination" is illegal in Arizona, and Deputy Yavapai County Attorney
Benjamin Kreutzberg told a judge hearing a civil case brought against Horne and
aide Kathleen Winn that interviews and telephone, email and other records
gathered during an FBI investigation will prove it. A judge in the Arizona
Office of Administrative Hearings is hearing the civil case, which could end
with an order that Horne repay $400,000 to donors and three times that amount in
fines.

Regardless of the outcome, the pursuit of the case will likely harm Horne, who
faces a challenge in this year's Republican primary. The same Democrat he barely
defeated in 2010, Felecia Rotellini, is also running.

Independent expenditures like the one Winn set up to benefit Horne have
proliferated in American politics since the 2010 Citizens United decision by the
U.S. Supreme Court that loosened campaign finance rules. Outside organizations
can raise and spend unlimited amounts for candidates, but are not allowed to
coordinate with the politicians.

In his opening statement Monday, Kreutzberg said: "This case is based in part
on circumstantial evidence and inference. However, those inferences are quite
strong."

Lawyers for Winn and Horne said the FBI got the definition of illegal
coordination wrong when the agency launched its investigation in 2011. The U.S.
Attorney declined to seek criminal charges, but the FBI turned its files over to
Arizona authorities and the civil allegations were brought by Yavapai County
Attorney Sheila Polk in October.

One of Horne's lawyers, Buddy Rake, said the FBI agents "confused the
distinction between communication and coordination."

Horne and Winn were friends, and she was also advising him on a major real
estate transaction that could result in financial security for Horne, Rake said
in his opening statement. Although Winn was running an outside political group
that supported Horne, that didn't mean she could no longer talk to him.

"You don't give up you First Amendment rights by forming a campaign
committee," Rake told Judge Tammy Eigenheer. "You can talk on the phone every
day.

"I think I'm being generous when I say they were confused -- they were confused
about what actually constituted coordination."

Winn and Horne denied the allegations, and their team of experienced Phoenix
lawyers showed Monday they would fight tooth and nail on every point.

"The two people involved will tell you unequivocally," Winn attorney Timothy
La Sota said. "They did not talk about the ad. They did not coordinate."

Among the well-known attorneys on the team are La Sota, Larry Debus and Michael
Kimerer.

Kimerer and Debus repeatedly objected during FBI agent Brian Grehoski's
testimony about emails and phone records, noting that there was no proof that
Horne or Winn actually made the calls. But they were mainly rebuffed, as
Grehoski laid out a chain of communications between them and consultant Brian
Murray of Lincoln Strategy Group on the day an ad attacking Rotellini was being
finalized.

Grehoski also testified that he was unable to link Winn to Horne's real estate
sale through a review of email records and an interview with his commercial real
estate broker.

He also said he obtained a video of Horne calling Winn "our secret weapon,"
during an election night party. Winn was hired as Horne's community outreach
aide after he was elected.

The hearing is expected to last three to four days. Because it is a civil case,
the standard of proof is lower than that required for a civil conviction and the
rules of evidence are relaxed.

Facing a tough election challenge in 2010, Horne and Winn allegedly worked
together to raise money for the outside group she headed to pay for negative ads
targeting Rotellini.

Horne was able to raise only $540,000, compared with his Democratic opponent's
$699,000.

When an outside group began spending $1.5 million attacking Horne, the group
Winn headed raised money to counter those efforts. She eventually raised more
than $500,000, most of which was spent on a last-minute ad attacking Rotellini.

Horne, a Republican, is the state's top law enforcement officer. He defeated
Rotellini, a former prosecutor and bank regulator, by about 63,000 votes out of
a total of 1.6 million ballots cast in the 2010 general election for attorney
general.